Farm Bill

Will we get a Farm Bill when they come back?

By Kody Bessent

There’s something about summer break that prepares students to go back to school. It’s the recharge and reset everyone needs from nine and a half months of rigorous learning. I think the same can be true for the August recess that Congress experiences every year. They come back from their one month out of session reinvigorated for the work that needs to be done to wrap up legislation for both the fiscal and calendar year.

While they’re back in their hometowns and off Capitol Hill, Americans are inundated with headlines and video clips of how inept Congress is at its job.

So many of these narratives have made people question the possibility of a Farm Bill.

First off, I believe we will get a Farm Bill done. Will it be before the current bill expires at the end of September? Honestly, that’s unlikely. Can it be done before the end of the calendar year? I believe so and it should be.

The basic function of Congress is to enact laws that influence the daily lives of Americans and is intended to serve as the voice of their constituency. Their sole responsibility is to approve funding for government functions and programs, including the Farm Bill, and oversee the implementation of such programs.

Media outlets and “keyboard warriors,” most of whom have been “Negative Nancies” lately, simply need to pipe down on Farm Bill commentary. Keep in mind the aforementioned thrive on readership and the engagement that “drama” provides. The sensationalized coverage can distract Members of Congress from doing their jobs as elected officials. And let’s face it: there’s no better drama than down playing Congress’ ability to enact a new and enhanced Farm Bill — especially in an election year.

It can be easy to join the negativity when you’re immersed in it. While we can’t control some of these circumstances, we can control our reaction.

Here are some action items I’m suggesting for all of us.

1) Take a breath and remove yourself from the theatrics you see in the news/social media or on television. Congress can function. It’s not always easy or pretty, but they can enact policy for the betterment of the agriculture industry and people in general.

2) Cll your Member of Congress. Times are extremely tough in farm country across the U.S. We know this because we are in it, but those outside of our livelihoods and industry don’t.

PCG Area Representatives:

Rep. Jodey Arrington: (202) 225-4005

Rep. Ronny Jackson: (202) 225-3706

Rep. August Pfluger:  (202) 225-3605

PCG Area Senators:

Sen. John Cornyn: (202) 224-2934

Sen. Ted Cruz: (202) 224-5922

Don’t get me wrong, we have great champions in Congress like House Ag Committee Chair Glenn “GT” Thompson (R-PA) and Sen. John Boozman (R-AR) as well as other allies and their staff trying to address challenges in the farming community on a daily basis. However, they, and members in our service area like Rep. Jodey Arrington (R-TX), need to hear from you regularly. The only way for them to keep an accurate pulse on the economy and communities they represent is to hear from you. Your feedback makes them more effective Congressional Members and educates their staff on important agricultural issues. Serve as a resource for yourself and your industry by sharing your story, frustrations, concerns and successes.

As a reminder, here are the base priorities that PCG is advocating for in the Farm Bill:

• Increase the statutory seed cotton reference price to better reflect costs of production — the House Agriculture Committee bill does this.
• Remove the prohibition of PLC enrollment and the purchase of Stacked Income Protection (STAX) or at a minimum enhance the Supplemental Coverage Option (SCO) so it is on parity with STAX — the House Agriculture Committee bill does this.
• Enhance the upland cotton marketing loan program by raising the level of the loan rate and modernizing the loan repayment provision — the House Agriculture Committee bill does this.
• Provide a mechanism for assistance to cotton’s infrastructure — the House Agriculture Committee bill does this.

Economic Stimulus Opportunity

While Congress can — and, again, I say will — enact a Farm Bill before the end of the calendar year, it will take time for producers to see the benefits. The agriculture industry cannot wait much longer for assistance, which is why it is so important that Congress also focus on developing a bridge of support that addresses the current financial crisis that producers and industry are facing today. The rise in inputs compared to current marketing conditions must be addressed to keep producers in business. If not, we will most likely see negative impacts on the industry such as bankruptcy and mental health decline.

All of you are ambassadors of our industry, so call your Member of Congress. Attend town hall meetings. Utilize email, text and social media to create awareness of your situation. These actions will further elevate the overall cotton industry’s initiatives and advance the development of strong farm policy. Not only to help you in your time of need as producers and industry, but also to help the general consumer. If we concentrate on engaging with Congress during their “summer break,” then they may reconvene in September equipped, energized and passionate about enacting strong farm policy.

By Kara Bishop

The USDA Economic Research Service released the 2024 Farm Sector Income Forecast report, and I’m starting to think the Secretary of Agriculture is living in an alternate reality.

He issued a response yesterday that left me and others scratching our heads, so I’m going to break it down.

Today’s farm sector income forecast shows that, while the projection shows a decline from the 2022 record high, 2024 is expected to close out a four-year streak of net farm income that’s above the 20-year average…

Oh yea, farm income for 2024 is going to be above the 20-year average — let’s all celebrate. Because the 20-year average is what farmers are concerned about. The 20-year average is going to keep farm operations in business. The 20-year average is going to save America.

NO ONE CARES ABOUT THE 20-YEAR AVERAGE!

Here’s what we know. Inflation is insane. Interest rates are insane. Cost of goods is insane. Cost of production is insane. Commodity prices are insane. It doesn’t matter where our current farm income sits in comparison to any average you come up with, row crop farmers aren’t profitable — much less breaking even.

Even Agri-Pulse sniffed that out, saying:

“But the rosier forecast masks tremendous variation between sectors. Unexpected gains in the livestock and poultry sectors are helping offset huge drops in sales across major row crops, including corn, soybeans, cotton and wheat.”

For the prior four years, net farm income was consistently at or below that historic average, even before the COVID-19 pandemic…

Cue the election year sensationalism. In translation, Vilsack claims farmers were not making money under the Trump Administration. Farmers were suffering under the Trump Administration compared to the Biden Administration. And honestly? No one cares about that either. The smoke and mirrors routine is getting old.

Let’s stick to the matter at hand: profitability for row crop farmers is nonexistent in 2024 and at the current trajectory, not looking good for 2025, either.

Without question, despite a softening of input costs, returns to crop producers remain a challenge as we recover from shocks in the market, such as Russia’s war in Ukraine.

When did input costs “soften?” Once a cost goes up it rarely comes back down. Let me know if you’ve noticed costs of goods and services going down in your business operating budgets. And I have no doubt that the Russia-Ukraine conflict affected the market. However, he’s omitting one of the biggest reasons we have market issues. Our trade deals flat out suck. Our trade deficit is higher than it ever has been, and we’re letting other countries run over us when it comes to agricultural exports.

…farmers will continue to see declining production expenses led by feed, fuel and fertilizer helping to offset lower commodity prices. Farmers’ equity in their farm operations also continues to increase, rising 2.7% since last year.

I think it’s inaccurate to apply data universally to farming. Farm operations are different depending on how you farm, what you farm, where you farm, etc. Applying the equity increases that livestock producers have experienced to all farmers unilaterally is dishonest.

The Biden-Harris Administration continues to fight for a system where family farms work for the family, not the other way around. Our investments in climate-smart conservation, on-farm renewable energy, domestic fertilizer production, expanded local meat processing, organic markets, and procurement from local and smaller-sized operations are contributing to a more resilient, robust and diversified food and farm sector so that all farms can thrive, not just the top earners. In addition to expanding access to crop insurance, which is vital in the face of increasing natural disasters and global disruption to markets, the next Farm Bill must cement this approach to investing in farms of all sizes, and move us away from a dangerous ‘get big or get out’ approach.

This is Vilsack’s story and he is stickin’ to it.

The idea that the big farms, the “top earners” are corporate farms is a myth — 98% of U.S. farms are family owned (ironically the source for this statistic is USDA). The large-scale family farms are responsible for 90% of the production. That doesn’t make them big farmer monsters preying on the small rooftop tomato growers. It means they assume 90% of the risk as well.

Originally when this country was founded, the American dream was to work hard, and pass that work ethic on to your kids. Provide them with a legacy to protect and pass on to their children. That’s why people flocked to America: the freedom to build something that would last. According to Vilsack, the American dream is “dangerous” and needs to be punished with weird calculations, dishonest averaging and a farm bill that penalizes those who have built generations of equity. The circumstances of 2024 are threatening the American dream. The cost of doing business compared to the profitability of said business is killing the American dream. However, it’s the American dream — the 10% of farms providing 90% of this nation’s production — propping this country up amid all the crises she’s currently drowning in.

So, in the end, is Secretary Vilsack clueless? I don’t think he is. I think he knows exactly what he’s doing and it’s time to call a spade a spade. Weaponizing USDA against the very people it was designed to support is shameful. The election year antics are getting ridiculous.

Get your crap together man. Before most of the farms are gone rendering nutrition programs and small farmers pointless. You care about the hungry? Prove it.

This week Plains Cotton Growers participated in 31 meetings and fundraisers in two days on Capitol Hill. It was a fast and furious fly-in as all commodity groups and associated industry swarmed Congress to advocate for farm policy.

“This was a well-designed and strategically calculated effort by many national, state and regional groups,” said PCG CEO Kody Bessent. “It was also unique — we don’t typically see a cotton producer, wheat producer, sorghum producer, peanut producer etc. and a lending institution all walk into the same meeting, but that’s what happened this week. We all worked together to paint the picture of farm country’s suffering.”

Members of Congress had been hearing from their constituency during the August recess and the timing of this fly-in couldn’t be better as it was fresh on their minds and they were ready to work. There were several encouraging experiences that the PCG delegation witnessed.

“I was encouraged by Sen. Cruz listening to us and immediately instructing his staff to communicate our issues and put pressure on the Senate to work on a farm bill,” said Travis Mires, PCG President. “I feel more optimistic about things than I did before we went.”

“We walked into every meeting a little differently this year than in the past,” said Brent Coker, PCG Vice President. “There wasn’t any small talk — we got down to business. This

week was productive, and I feel Congress began to really understand just how badly farmers are hurting.”

“I was encouraged by all the collaboration that PCG had with the other commodity groups and organizations,” said PCG Chairman Martin Stoerner. “We had one collective voice, and I felt that was powerful.”

While the group was in D.C., a memo was issued by House Ag Committee Ranking Member David Scott to his democrat delegation. He stated, “We all know that Congress needs pressure to act. That is why Chairman Thompson, Chair Stabenow, Ranking Member Boozman and I agree we are better off without another extension at this point. The farm groups are also asking Congress to continue to work on passing a full farm bill this year and are not supporting any extension at this time.”

Congress may have a limited number of days left in session to get a farm bill and disaster-economic assistance package accomplished by the end of the calendar year, but the pressure is real, and they understand the urgency and importance of getting it done. There are ongoing efforts for a continuing resolution to keep the government running at the end of this month, and we’re optimistic that Congress will function and work for the people as is their charge.

That being said, we cannot let up on our own communication efforts. We must let them know continuously what agriculture needs. We are all ambassadors of our industry, so continue to engage with your U.S. Congressman and Senators in every way possible. Your call provides real-time information that helps them as legislators and helps drive federal policy for the betterment of our industry and nation.

Financial Burdens Crushing Producers, Infrastructure

By Kara Bishop

On February 14, 2024, Secretary Vilsack addressed the House Agriculture Committee. He looked Rep. Austin Scott (R-GA) right in the eyes and said, “The time period of 2021-2023 represents the highest level of farm income in the last 50 years.”

And, while he may be right, I would argue that gross income doesn’t amount to a hill of beans compared to net. Gross farm income can be as high as it wants to, but profit margins just aren’t there. So what good is income if there’s no profit?

It’s time to stop fighting over the Farm Bill and pass this legislation to save farm country.

 

The reality:  producers are looking at the same commodity price from the 1970s, which is grossly disproportionate to actual production costs.

“In my 29 years in agriculture banking, cotton prices have predominantly stayed in the 65- to 75-cent range,” said Mike Metzig, Market President of Lending for AgTexas Farm Credit Services. “However, the cost of goods, services, labor and equipment has skyrocketed.”

During my interview to become the communications director for Plains Cotton Growers, I asked the officer team to identify the greatest challenge to their livelihoods. They all said input costs — and that was at the end of 2021 (an above-average crop year). Throughout my tenure here, I’ve interviewed farmers of different ages, genders and operations. They all echo the same sentiment. Input costs’ relationship to commodity prices doesn’t pencil.

House Ag Committee Chair Glenn “GT” Thompson (R-PA) agrees, which is why he and the rest of the committee developed a bipartisan Farm Bill addressing the shortcomings of farm income by increasing the safety net and putting more money in the Foreign Market Development Program and Market Access Program.

To determine the validity of arguments made for a bill that increases the farm safety net, the House Ag Committee recently conducted a hearing on the financial conditions of farm country. One of the witnesses at the hearing was American Cotton Producers Chairman David Dunlow, who farms cotton, peanuts, soybeans and wheat in Gaston, North Carolina.

During his testimony Dunlow stated, “I have never known a worse time in my 40 years of farming. The stress alone has led to personal health issues as a I wonder how our operation will survive.”

Dunlow has been forced to refinance all the farmland he personally owns to pay his operating debts. He struggles to find any traditional lending institutions to fund his operation, so he must rely on credit from a private equity-funded institution at a higher-than-market interest rate.

“In 1990, the cost of a new cotton picker was around $40,000 and the price of cotton was 74 cents,” he added. “Today, a new cotton picker is $1.1 million, and cotton on the December 2024 futures market is still trading in the low 70s — nearly 35 years later.”

Production Decline

If you look specifically at the Texas cotton industry, you see two crop years showing devastating production numbers. Punishing drought wiped out the majority of the cotton crop in 2022 — with an abandonment rate of more than 73% according to USDA 578 data. The 2023 crop year was just about the same profit-wise. There was a little more rain, but more money spent on inputs as operations tried to make a crop without subsoil moisture.

Producer and industry stress is high given the financial uncertainty everyone is under. “Just like producers, banks have experienced a ‘mixed bag’ of conditions as well,” Metzig said. “We had some producers that were short on equipment or land notes, but not so many that it exceeded our expectations. Most everyone was able to pay their operating note.”

However, during Dunlow’s exchange with Scott at the House Ag Committee hearing, an anecdote was shared involving a producer and banker. The producer asked, “If farmers have average yields, what percentage of farmers will you be able to finance next year?” The banker responded, “Maybe 80%.”

This leaves 20% of farmers out of business. Scott pointed out that in times past, a farmer would buy or take over the lease of farmland and expand their operation if someone went out of business. “However, in today’s ag economy, you can’t expand if you’re not cash flow positive,” Scott added.

While it may not be as drastic in our area, it’s a concerning trend that may be foreshadowing the demise of agriculture and the nation’s cotton industry as we know it.

Infrastructure Decline

It’s not just producers that need a good crop year. Cotton infrastructure desperately needs a crop. In the past two crop years, five gins closed in the PCG service area. One of those gins reopened for last season, three gins are dormant and one other gin is uncertain.  This is not counting the gins that are still viable but didn’t have a crop to process last year. Several are deciding whether they will open this year.

“When your livelihood depends on throughput, and your capacity exceeds your throughput for an extended period of time, then your business is going to be under serious economic strain,” said Mike Cowley, vice president and lead relationship manager for CoBank. “A healthy supply chain starts with a successful farmer. Farmers need a Farm Bill that will help them stay in business. If we’re going to penalize the most efficient producers in the world by not giving them a safety net that protects them, then we’re giving other countries a serious competitive edge — and that’s just one of the concerning ramifications.”

We’re all coming up with more questions than we are answers right now in this economy. Will more gins close? Will more farmers go out of business? When we do have a good crop, will there be enough infrastructure left to process it?

Right now, the future looks bleak. However, as one producer said to me six months after I started this job, “You can’t be a farmer without faith.”

I have faith that Congress will take the state of our ag economy seriously. The Senate needs to take our ag economy seriously. Secretary Vilsack needs to take our ag economy seriously. Telling the nation that farmers are fine because they’ve had the largest income in the last 50 years is irresponsible and damaging to the main sector that the U.S. Department of Agriculture has been charged to help.

If the goal is to protect the nutrition programs, then protect our farmers. They need relief.

Without them, we’re going to have a real hunger crisis on our hands.

P.S. Everyone needs to call their Representatives and Senators to tell them how desperately producers need this farm safety net that was passed out of the House Ag Committee in May. According to many in the industry, including Cowley, this bill does more for farmers than the last several — going back all the way back to 2002.

Rep. Jodey Arrington: (202) 225-4005

Rep. Ronny Jackson: (202) 225-3706

Rep. August Pfluger:  (202) 225-3605

Sen. John Cornyn: (202) 224-2934

Sen. Ted Cruz: (202) 224-5922